GERS day is all about lies, damn lies, and statistics

Yesterday the First Minister announced that Scottish Government research based on UK Government figures has shown that leaving the EU would cost Scotland £11.2 billion a year. Independence supporters have been sharing this information on social media as proof that we need to be an independent Scotland within the EU in order to avoid this calamity. Today, the GERS figures show that Scotland may have a £9.5 billion annual fiscal deficit and the same people are pointing out that GERS is a far from accurate prediction of the finances of an independent Scotland. The hypocrisy is pretty transparent and i’m not sure it is going to win over any converts.

It isn’t just pro independence supporters who have the same biases. Most people cherry-pick statistics that support their way of looking at the world. GERS day is Christmas day for Scottish political cherry-pickers as regardless of what is in the report it can always be used to support both sides of the argument. If the GERS figures are shocking as they have been since the oil price slump then many unionists see it as evidence of Scotland being a financial basket case unable to fend for itself. If the figures are good like they have been for most of the recent past then the figures are evidence of the union dividend Scotland could not live without.

There is reason to be sceptical of GERS though, not only are the figures meaningless due to the fact that they can be twisted to fit any political narrative. They are meaningless because even if they are accurate it is difficult to extract any actual predictions from them as financial forecasting is notoriously error prone. Macro economic prediction has a dismal record even as reported in the Financial Times. The number of recessions predicted by economists in 2008 was 0 out of 68. In the words of the now deceased economist, public official and diplomat, John Kenneth Galbraith:

The only function of economic forecasting is to make astrology look respectable.

We need to move the debate on by accepting that the future is uncertain and that we don’t know what the economy will be like at any given time in any given version of the future. In 2014 we were sold the surety of union but got the uncertainty of brexit. However, if we had voted for independence we would be dealing with a much different financial situation than the one predicted in the White Paper.

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Instead of bending stats to reassure ourselves the future will be great we should concentrate on which potential future we think would best cope with uncertainty. I would argue that a small, more representative, more flexible country at the heart of Europe is the best option. Others might counter that a larger, more diverse nation free from the shackles of EU bureaucracy would give us a greater chance. There are also lots of possible options in between.

There are many reasons to be sceptical of the GERS figures and we should acknowledge that when those figures are brought up as the basis of an argument against independence. However, we would win more converts if we were able to say exactly what we would do to rectify the situation if the GERS figures were correct. What levers would we use to grow the economy and reduce the deficit? How we are impeded from doing so now and how by doing so we will improve the lives of most Scots. If there is to be a second independence referendum more and more people will be aware that no vision of the future offers certainty. That referendum will be won by the side who has the best solutions to the worst case scenarios as opposed to the side that cherry-picks statistics in order to pretend there is any sort of safe bet.

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